Exam 6: Inventories

At the end of 2012, a company reported cost of goods sold of $4,800, which represented 80% of the goods available for sale. The beginning inventory amount was twice as much as the ending inventory amount. What was the amount of purchases for 2012?

Dianna Co. prepares monthly income statements. Inventory is counted only at year end; thus, month-end inventories must be estimated. All sales are made on account. The rate of mark-up on cost is 20%. The following information relates to the month of September. Accounts receivable, September 1 $121,000 Inventory, September 1 147,000 Collections of accounts during September 184,000 Purchases during September 165,000 Accounts receivable, September 30 127,000 Required: Calculate the estimated cost of the inventory on September 30.

Explain how items of inventory should be grouped for purposes of testing for impairment.

If the gross margin percentage used in the gross margin method were overstated (e.g., 36% instead of 32%), what would happen?

Why are inventories reported at the lower of cost and market?

What journal entry is required when inventory is sold during the year under the periodic inventory system?

Which statement is not correct about the retail inventory method?

What definition is used for "market" under IFRS and ASPE?

Which statement best depicts the inventory cost flow equation?

Which statement is not correct about inventory errors?

What is the meaning of the terms "F.O.B. destination point"?

Assume that ending inventory in fiscal 2012 is overstated by $1,000.What impact will this have on fiscal 2012 financial reporting?

What journal entry is required when inventory is purchased under the periodic inventory system?

Identify whether the following are benefits of using a perpetual inventory system (in comparison to a periodic system).

Assume that a purchase invoice for $1,000 was appropriately recorded in fiscal 2012, but the inventory was excluded in error during the ending inventory count. What impact will this have on fiscal 2012 financial reporting?

Assume that ending inventory in fiscal 2012 is overstated by $1,000.What impact will this have on fiscal 2013 financial reporting?

What journal entry is required when inventory is purchased under the perpetual inventory system?

Johnson Ltd. began operations on January l, 2012. Merchandise purchases and four alternative methods of valuing inventory for the first two years of operations are summarized below: Required: a. Which of the four methods listed above does not apply the matching principle? Briefly explain. b. Determine the cost flow assumption or inventory valuation method that would report the highest net income for 2012. c. Assuming that FIFO had been used for both years, how much would the cost of goods sold be for 2013?

Which inventory method provides the highest quality information for the income statement?

Which statement is correct about overhead?